The Feds Lower the Rates
By Chris Petry
On Wednesday, September 18th, the Federal Reserve initiated their first cut since March of 2020, slashing rates by a half percentage point. Of course, there were critics on both sides of the debate, some urging a higher percentage cut and others indicating they’d prefer the security of more gradual reductions in rates. One thing is for sure, the majority of American consumers, budgets stretched by two years of unprecedented inflation, generally welcomed news of the long-gestating rate slash.
So, what does this decision mean for homeowners? What does it mean for those who have delayed purchasing a home because of the two-fold obstacle of increased home prices and interest rates at levels unseen in the last 20 years? At this moment, most economists agree it won’t move the needle much but it’s much-needed step in the right direction. In fact, most of those economists are predicting another rate decrease or two by the end of the 4th quarter. That would likely go a long way in improving optimism in the marketplace, even if the rates aren’t drastic enough to greatly chip away at high interest debt like credit cards.
While we shouldn’t get too far ahead of ourselves, we also shouldn’t discount the rate of progress. Now might be the perfect time to begin laying the foundation of your real estate dreams. It’s worth repeating, there’s never been a time in history where conditions were perfect. It’s also likely that no one born after World War II encountered the kind of destabilizing society-altering event that was Covid-19. As it’s been said many times as we approach the 5th year since the outbreak of the pandemic, it was all new terrain. The Federal Reserve, like every other institution private or public, was faced with a once-in-a-century event that necessitated actions that were unlikely to have occurred otherwise. This is the real start of the long correction.
What should you do to prepare to sell your home? As Sir Winston Churchill famously quipped, “Keep calm and carry on.” If you’ve already employed a REALTOR to assist you in selling your home, you’re already on the right footing. A great REALTOR will create a dynamic marketing campaign to assure maximum exposure for your property and guide you through the listing and selling process. As rates creep down, competition for your home will likely increase.
What should you do to prepare to buy a home? Take advantage of rates increases to slash high interest debt. Though as stated above, we’re a bit of a ways off from rate increases that will add immediately visible interest savings. You might also begin a rapport with a licensed sales professional who can provide the kind of guidance, support and advice you may need, particularly if you’re a first-time buyer or haven’t bought a home in a very long time. A REALTOR will also get more homes in front of you, increasing your likelihood of finding the home that meets your individual needs.
We’ll comment on further rates cuts as they happen and do our best to explain the implications for the real estate market. Right now, there’s still a level of ambiguity around the extent of future cuts or the timetable for when those may happen. However, if the Fed’s decision earlier in the week is any indication of what’s around the corner, it looks like we may finally be headed back toward a more stable and recognizable housing market.
